Should we be doing annual performance reviews?

The end goal of the review is to help employees understand their strengths and weaknesses and improve performance. Managers are often mechanical in conducting reviews and don’t allocate enough time and effort to actually make a difference. On the other hand, employees are primarily focused on the amount of annual increase they will receive, with little concern for the feedback from their manager. Could it be that by shifting their perspective and recognizing the mutual benefits of open communications and genuine feedback, the performance review can completely transform? To truly benefit from these discussions, both parties need to feel valued and must invest wholeheartedly.

According to Gallup research, only around 14% of employees strongly agree that their performance reviews inspire them to improve. Some employers feel the same and are moving away from conducting an annual review. Many innovative processes have been developed over the years to transform performance reviews. Continuous feedback eliminates the notion of exclusively using annual reviews by ensuring more frequent, timely discussions around performance.

Gathering feedback from your customers and other peers in the form of 360-degree feedback is another excellent way to get a full scope of employee performance throughout the year. Lastly, focusing more closely on development rather than a simple rating system will be effective in that employee’s progress throughout their tenure. This can contribute to lower turnover, more engaged employees, and an overall healthier work environment.

Less than half (49%) agree that managers at their organization are effective at assessing the performance of their direct reports, as stated by SHRM. Only 1 in 3 employers indicated that employees feel their performance is evaluated fairly.

“Every single human alive today is a horribly unreliable rater of other human beings.” – Marcus Buckingham, Head of Research, People & Performance

The traditional performance review process is riddled with common pitfalls. Just to name a few, recency effect (like an employee’s performance at its best right before the review, similar to children at Christmas time), employee comparisons, personal biases, halo effect, or primarily focusing on prior performance issues as a crutch for present/future conversations can have staggering negative implications on your employees’ development. Being able to leave those situations in the past to focus on present productivity can lead to more well-received messaging with an increased potential for impacting performance. On the other end of the spectrum is factoring recency error, where the review is based solely on what the manager can remember about the past couple of weeks and months.

Another potential stumbling block is a lack of clear expectations from the start. Even when supervisors believe they’ve been clear with employees about their tasks and duties, misunderstandings can occur. Weighting performance criteria helps bridge this gap and ensures shared understanding.

Having consistent, ongoing discussions with employees is imperative for employee betterment. Frequent, well-documented meetings help employees feel valued and ensure their work aligns with organizational goals. Set a clear cadence for these weekly, monthly, or bi-monthly sessions to establish a strong foundation for ongoing feedback and refinement.

 

There is a light at the end of the tunnel.

All of these pitfalls seem to have a common denominator, the connection between manager and employee. With the number of remote workers today, this may be even more difficult to build a strong relationship and rapport with each employee. More frequent, casual check-ins could help build a stronger foundation and relationship with each employee, encouraging open, honest communication. This can also be done by addressing both positive and negative actions in a timely manner. Offering immediate praise and encouragement signifies that the manager is engaged with the employee and values them. On the flip side, addressing shortcomings or negative behavior immediately will allow the employee the opportunity to make changes for improvement. This is a great opportunity to encourage employees to document their accomplishments during the year and even what they learned from things that didn’t go as planned. Both parties share a responsibility to capture examples to support the feedback throughout the year and not miss any significant events.

Are there better methods for measuring and improving employee performance and output? Consider the frequency and demeanor of the interactions between managers and employees. Don’t be afraid to think outside the box in terms of other ways to engage and establish something more meaningful. Some Companies like Google, Cisco, Samsung, and Starbucks, have implemented gamification to increase employee engagement in the performance review. Gamification is the process of adding game-like elements to non-game contexts, such as work, learning, or everyday tasks. Where there is some type of incentive, people are more likely to participate. Adding a leadership board for the most attended sessions, or tiered rewards based on rate of improvement could be great motivators for increased productivity. You could offer small rewards, like plaques or badges, or offer the opportunity for those employees to eat with the CEO. It should be a collaborative process, with mutually beneficial results built on a foundation of trust and understanding.

 

Try to envision a world where the term “performance review” is taboo and managers are empowered to be more creative.

The idea would be to use unconventional methods and tools to give guidance and feedback to their employees. This could be in the form of renaming the process, so that it sounds less daunting and eliminates the negative connotations. Titles such as “Two-Way Talks,” “Coffee Chats,” or “Check-Ins” could lighten the mood while keeping the contents of the discussion professional and targeted at performance. Aside from simply renaming the process, giving the managers the power to customize how these are laid out per their department, could be a fun way to get everyone engaged. This would be similar to how some IT teams at FinTech companies give their engineer groups nicknames such as “Team Hip-Hop”.

The timing and sentiment of each meeting can make or break whether the relationship is “second-date” worthy, or one where you’ll have to swing for the fences again. In Layman’s terms, if the timing and overall atmosphere of the first meeting is unfavorable (lack of openness with unclear messaging), it can significantly impact the likelihood of a positive series of meetings moving forward. If the meeting flows smoothly, there is the likelihood of a productive second meeting. Conversely, if the conversation is forced, or the overall vibe is off, it may be harder to establish an effective process. This ties back to the building blocks, allowing managers to mentor and lead each employee in a way that builds a strong bond of trust and rapport.

 

Many supervisors have not been properly trained on how to give a performance review.

They may be uncomfortable in giving constructive feedback or not know how to make these interactions positive and motivational. Our training is designed to empower individuals, change previous negative connotations about reviews, and drive organizational excellence.

While many supervisors are eager to provide valuable feedback, additional training could enhance their ability to deliver constructive criticism in a positive and motivating manner. Other demographic differences in management styles may influence the effectiveness of these interactions, particularly as younger generations enter the workforce. For example, intergenerational differences have shifted management styles between Boomers and Millennials, and will likely continue to shape how performance reviews are conducted and perceived by Generation Z.

 

In summary, we acknowledge that it’s important to set clear expectations, hold employees accountable, and give comprehensive feedback. Using a different approach can lead to a higher level of goal achievement. Our performance management system, BalancedResults, supports the ideology of capturing and logging real-time events throughout the year. Customizable meeting reminders ensure this process continues to progress as planned, meeting deadlines, and achieving desired outcomes.

If you’re interested in developing a thriving workplace that promotes a synergistic manager/employee connection, employee growth, and open communication that drives organizational ROI, schedule a meeting with BalancedComp today.

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